Communication and information – what can you expect?
As a beneficiary, your charity is entitled to certain information and standards of practice from the executor of the estate. These include having the estate administered in accordance with the provisions of the will, and the executor adhering to certain duties including to:-
- collect in and protect estate assets;
- ascertain and pay the deceased’s legitimate debts;
- deal with any tax issues; and
- prepare estate accounts.
These rights would be of little value if beneficiaries had no ability to check adherence to them and, in extremis, take action to remedy a breach.
That beneficiaries have a right to know of the existence of a will naming them as a beneficiary is well established, and it would of course be absurd for an executor to take any other position, because as soon as a grant is obtained a will becomes a matter of public record and anyone is able to obtain a copy upon simple request of the Probate Registry and payment of a small fee. It is standard practice therefore for executors to provide beneficiaries with a copy of the will.
Strictly, the totality of an estate’s beneficiaries own the estate and are entitled to its assets, including documents. In practice, however, beneficiaries do not act in unison, and in those circumstances individual beneficiaries will need to consider what information they are entitled to.
Beneficiaries have no absolute entitlement to disclosure, but they do have a right to information by virtue of the fiduciary duty executors owe to keep beneficiaries informed and to be ready with their accounts.
Case law has also established that executors cannot plead confidentiality issues as a blanket reason for refusing to disclose.
Although there is no single authority for what information beneficiaries are entitled to and when, case law has established that the least executors should provide to beneficiaries if requested is:-
- a copy of the will and any codicils; and
- estate accounts.
In terms of other documents and information, executors should balance various factors and consider all the relevant circumstances of the case. A reasonable summary of how executors should deal with matters would be as follows:-
- consider the request and the reasons for it;
- consider whether disclosure or non-disclosure would be in the best interests of the administration;
- consider whether complying would be proportionate in terms of how much time or cost would be involved;
- not adopt confidentiality as a blanket reason for not responding – consider other options e.g. redaction, confidentiality agreements;
- not feel obliged to give the beneficiary reasons for a decision but have reasons and keep a record of them in case the matter goes to court.
Executors will be at risk on costs if they refuse to disclose, and the beneficiary makes an application to court and the court orders disclosure. The threat of an adverse costs order can be a useful tactic to deploy if an executor is refusing disclosure and the disclosure would not appear to place an unreasonable burden on the executor (e.g. a request for progress on the sale of assets or for copies of correspondence relating to the administration).
It should also be remembered that those interested in an estate can invoke s.25 of the Administration of Estates Act 1925 and ask the court to order that the executor prepare and provide an inventory of the estate and an account of their administration. Typically these take the form of a timeline setting out what the executor has done and when, and providing a full account of all monies received in to the estate (i.e. estate assets) and all monies paid out (i.e. estate liabilities). The executor has to swear an oath attesting to the inventory and account being “true and perfect” according to the best of their knowledge, information and belief. Intentionally swearing a false oath is perjury punishable by imprisonment.
In short, beneficiaries should request a copy of the will and estate accounts, and any other information or documents they consider are necessary for them to keep abreast of developments in the administration and to satisfy themselves that the executors are acting properly. Requests for information ought to be supported with reasons, and perhaps an offer to keep matters confidential if that appears to be an issue, or offering to cover modest photocopying charges. Beneficiaries can always threaten an application to court for disclosure, although best practice would be to take legal advice before doing so.
What about costs?
As the title of this article imagines, costs incurred in administering an estate can often seem excessive, and beneficiaries (particularly residuary ones) can be left feeling like they have no control.
It is common for testators to leave a monetary gift to their chosen executors as a “thank you” for taking on the role. However, what is the position if an executor wishes to be paid for their time and trouble? What is the position if the testator chooses a professional executor?
The basic position is that executors – along with other fiduciaries – are not entitled to charge and in that way profit from their position. There are several exceptions:-
- Where the will contains a charging clause that expressly permits the executor to be paid for their services out of the estate. Charging clauses can differ in scope (for instance a charging clause may permit an executor to charge for any services he or she carries out in connection with administering the estate, or just related “professional” services e.g. where the executor is a probate solicitor). Beneficiaries should check the terms of such clauses and ask the executor to confirm that they have paid themselves in accordance with them. Note that where the will contains a charging clause, section 28 of the Trustee Act 2000 may permit an executor acting in a professional capacity to charge for all services carried out in connection with the estate administration, even if the services could have been provided by a non-professional executor, unless the charging clause says something different (most administrations involve both professional and non-professional services).
- Where an executor is appointed in his or her professional capacity and he or she qualifies to charge under statute. Even if the will does not contain a charging clause, section 29 of the Trustee Act 2000 permits executors to charge (including for services that a non-professional executor could have carried out), providing they are acting in a professional capacity, are not a sole executor, and if each of the co-executors agree in writing. Executors are entitled to “reasonable remuneration” under this provision, and the reasonableness of such remuneration is controlled by the Court and can be challenged by the beneficiaries (see below).
- Others exceptions are where all the beneficiaries (over the age of 18 and having capacity) join together to permit the executor to charge, or where the court exceptionally agrees to exercise its inherent jurisdiction over trusts and orders remuneration.
If none of these exceptions apply then the executor will not be entitled to charge for their services; however, they would be entitled to be reimbursed expenses properly incurred when acting in the administration e.g. the fee for obtaining the grant, postage, photocopying, any necessary travel etc.
What about legal costs?
If it is established that a solicitor who is acting as executor can charge, or if the executor instructs a solicitor to carry out work for the estate, and you have concerns about the charges, as a beneficiary you have various remedies available.
Section 71 of the Solicitors Act 1974 provides that beneficiaries are entitled to seek assessment of a solicitor’s costs charged to the estate, whether or not the solicitor is an executor of the estate: the executor can challenge the costs as the “client”, and the residuary beneficiary can challenge as a person interested in the property out of which the executor has paid or is entitled to pay the costs (i.e. the residuary estate).
There are strict timeframes for acting (usually applications will not be considered after the expiry of 12 months from the date of the bill), although the court retains an inherent jurisdiction after the expiry of 12 months in exceptional circumstances.
The usual test on assessment is that a solicitor’s costs must be fair and reasonable having regard to all the circumstances of the case.
Case law has developed an additional safeguard for beneficiaries, in that whilst a “normal” client may ask a solicitor to do whatever work he or she likes, it has been established that a solicitor cannot charge a trust estate anything not necessary for the administration – even if the client expressly requests it: where the client is an executor, the solicitor has a duty to inform them that if something is requested but is not necessary then it cannot be charged to the estate.
The Law Society has confirmed this protection in its guidance to residuary beneficiaries:-
“Residuary beneficiaries are not clients, but they are able to complain and to expect the solicitor to respond to the matter under the solicitor‘s complaints handling procedure. This is in line with a residuary beneficiary’s ability to seek third party assessment of costs under section 71(1), Solicitors Act 1974, whether or not the solicitor is an executor of the estate.”
The Law Society and the Solicitors Regulation Authority have both set standards they require solicitors to adhere to when dealing with estates and beneficiaries, including that beneficiaries ought – in addition to their remedies under statute – be given cost estimates and have recourse to the solicitor’s complaints procedures as if they were the client.
Finally, the Legal Ombudsman has confirmed that he will accept complaints regarding solicitors from non-client beneficiaries of an estate.
In short, there are several avenues open to beneficiaries, and it is particularly important that charity beneficiaries consider what their rights are in any given circumstance and seek appropriate advice so that their charity’s rights can be protected.
To sign up to our mailing list to receive event invitations, legal updates and our quarterly Legacies Roundup, please click here and tick “Legacies/Probate”.
All content on this page is correct as of May 14, 2018.